January to September 2013: Linde gives a steady business performance

Group outlook for 2013 in view of unfavourable exchange rate effects: Increase in revenue; operating profit target now around EUR 4 bn

Munich, 29 October 2013 – In the third quarter of 2013, the technology company The Linde Group continued to give a relatively steady business performance, achieving significant growth in Group revenue and Group operating profit in the nine months ended 30 September 2013. "We have fared quite well, although economic trends have been anything but dynamic and exchange rates have increasingly moved against us, especially in the third quarter," commented Professor Dr Wolfgang Reitzle, Chief Executive Officer of Linde AG, on the interim report. "The fact that we have been able to increase our revenue and earnings even in these conditions and that we have maintained a high level of profitability says a great deal about our business model and our set-up."

Against a background of unfavourable exchange rate effects, Linde is now seeking to achieve Group operating profit in the full year 2013 of around EUR 4 bn. Until now, the Group's target had been a figure for Group operating profit of at least EUR 4 bn. Linde continues to assume that it will achieve a higher level of Group revenue in the current year 2013 than in 2012. For the 2016 financial year, the Group has set itself the target of generating Group operating profit of at least EUR 5 bn. Return on capital employed (ROCE2) in the same year should be around 14 percent. These medium-term targets are founded on the assumption that there will not be any significant shifts in exchange rates compared with those prevailing at the year-end when the medium-term outlook was formulated. If exchange rates over the coming years remain at similar levels to those which have applied recently, this would reduce Group operating profit by around EUR 250 m in 2016 and might also have an adverse impact on return on capital employed.

In the nine months to 30 September 2013, Group revenue rose by 8.7 percent to EUR 12.468 bn, compared with EUR 11.469 bn in the first nine months of 2012. During the reporting period, exchange rate effects increasingly had an adverse impact on revenue trends. In particular, the Australian dollar and the US dollar, the British pound and currencies in the emerging economies fell sharply against the euro. After adjusting for these effects (corresponding to revenue of EUR 407 m), the increase in revenue was 12.7 percent. US homecare company Lincare, acquired by Linde in August 2012, contributed EUR 1.176 bn to Group revenue.

Linde was able to reinforce its profitability at a high level and increased its Group operating profit by 11.8 percent to EUR 2.996 bn (2012: EUR 2.680 bn). As a result, the Group operating margin rose to 24.0 percent (2012: 23.4 percent). One item contributing to the earnings trend was income of EUR 57 m resulting from a dividend payment made by a company in North America in which Linde holds an investment. On the other hand, it should be noted that there were adverse currency fluctuations during the reporting period. The effect of these distortions was to reduce earnings by EUR 88 m. Without the distortions, Linde would have achieved a 15.6 percent increase in Group operating profit.

Profit for the period rose in the first nine months of 2013 by 11.0 percent to EUR 1.078 bn (2012: EUR 971 m). After adjusting for non-controlling interests, profit for the period attributable to Linde AG shareholders was EUR 997 m (2012: EUR 893 m). This gives earnings per share of EUR 5.38 (2012: EUR 5.09).

Gases Division

Linde achieved 9.3 percent revenue growth in the Gases Division in the nine months to 30 September 2013 to EUR 10.510 bn, compared with revenue of EUR 9.620 bn in the first nine months of 2012. When considering this significant increase, the Lincare business should be taken into account. During the reporting period, Lincare contributed EUR 1.176 bn to the total revenue of the Gases Division. On a comparable basis (i.e. after adjusting for exchange rate effects, changes in the price of natural gas and the impact on the consolidation of the Lincare acquisition), the increase in revenue was 3.3 percent. Within the Gases Division, Lincare is included in the Americas segment and the Healthcare product area.

Business in the EMEA region was strengthened partly as a result of the contribution made by the Continental European homecare operations acquired by Linde from Air Products in April 2012.

Business trends in the EMEA segment were adversely affected by the prevailing unfavourable economic conditions in the eurozone. Demand in the liquefied gases and cylinder gas product areas was accordingly modest. However, positive trends were to be seen in the on-site business in virtually all parts of the EMEA region.

The market environment in Eastern Europe (with the exception of Russia) was characterised by a downturn in economic activity. The economy in the Middle East on the other hand remained relatively robust.

In the Asia/Pacific segment, Linde generated revenue in the nine months to 30 September 2013 of EUR 2.843 bn, a figure which was not quite as high as the figure of EUR 2.884 bn achieved in the first nine months of 2012. This was due to unfavourable exchange rate effects. On a comparable basis, revenue rose by 3.8 percent. Growth in the reporting period was adversely affected in particular by the weaker economic environment in manufacturing industry and in the mining industry in the South Pacific region. Operating profit in the reporting period remained virtually unchanged at EUR 747 m (2012: EUR 743 m). The operating margin therefore rose to 26.3 percent (2012: 25.8 percent).

Within the Asia/Pacific segment, the most positive trends were to be seen in the business in the South & East Asia region, where the rate of growth was into double digits. Linde achieved volume increases here in virtually all product areas, especially in the on-site business. The Group also generated revenue growth in the Greater China region, whereas the market in the South Pacific region was characterised by declining volumes.

In the Americas segment, revenue grew by 38.8 percent in the first nine months of 2013 to EUR 3.190 bn (2012: EUR 2.299 bn). This considerable increase was due above all to the positive contribution made by US homecare company Lincare. Lincare operates solely in North America and contributed revenue of EUR 1.176 bn in the reporting period to the total revenue of the Americas segment. On a comparable basis (i.e. after adjusting for exchange rate effects and changes in the price of natural gas and the effect of the Lincare acquisition on the consolidation), the increase in revenue in the Americas segment was 2.1 percent. Operating profit rose by 45.9 percent to EUR 852 m (2012: EUR 584 m), mainly as a result of the Lincare business. The operating margin was 26.7 percent (2012: 25.4 percent). One item contributing to the earnings trend in the Americas segment was income of EUR 57 m which Linde received during the reporting period in the form of a dividend payment from a company in which it holds an investment.

In North America, there were positive trends in the electronic gases business, particularly in relation to technical material and equipment. Linde also achieved growth in the liquefied gases and cylinder gas market, while the on-site business was characterised by declining volumes. The Group was able to continue to strengthen its business in South America, generating increased revenue in Venezuela and Argentina in particular. Linde's business performance in Brazil, South America's largest market, was much more modest than that seen in Venezuela and Argentina.

A comparison of the various product areas in the Gases Division reveals that, as expected, the fastest rate of growth was in the Healthcare business, following the acquisitions made by the Group in the course of 2012. Here, Linde generated revenue in the first nine months of 2013 of EUR 2.263 bn, almost double the figure achieved in the first nine months of 2012 of EUR 1.265 bn. After adjusting for exchange rate effects and the effect of the Lincare acquisition on the consolidation, revenue growth in the Healthcare product area was 5.5 percent.

In the cylinder gas product area, Linde saw an increase in revenue on a comparable basis in the nine months to 30 September 2013 of 1.3 percent to EUR 3.076 bn (2012: EUR 3.037 bn). In the liquefied gases product area, revenue generated was EUR 2.503 bn. On a comparable basis, this was 2.0 percent above the figure for the first nine months of 2012 of EUR 2.453 bn. In the on-site business (where Linde supplies gases on site to major customers), revenue rose on a comparable basis by 5.1 percent to EUR 2.668 bn (2012: EUR 2.539 bn).

Gases Division – Outlook

Recent economic forecasts indicate that the rate of growth in the global gases market in 2013 will be similar to the rate seen in 2012. Linde remains committed to its original target in the gases business of outperforming the market and continuing to increase productivity.

In its on-site business, Linde has a healthy project pipeline, which will contribute to increases in revenue and earnings over the remaining part of the 2013 financial year. The Group expects its liquefied gases and cylinder gas product areas to perform in line with macroeconomic trends. In the Healthcare product area, Linde is expecting to achieve significant increases in revenue and earnings as a result of the acquisitions it has concluded, especially that of Lincare.

Against this background, Linde continues to expect that revenue generated by the Gases Division in the 2013 financial year will be higher than that achieved in 2012 and that operating profit will increase in the current year.

Engineering Division

In the Engineering Division, July to September 2013 saw the continuation of a dynamic trend in orders already apparent in the first half of 2013. In the third quarter, Linde was also awarded new projects. As a result, there was a significant increase in order intake in the nine months to 30 September 2013 of 74.7 percent to EUR 3.661 bn (2012: EUR 2.095 bn). Revenue and earnings reflected the progress made on individual plant construction projects. There was a rise in revenue in the first nine months of 2013 of 18.9 percent to EUR 2.068 bn (2012: EUR 1.740 bn), while operating profit increased by 5.1 percent to EUR 225 m (2012: EUR 214 m). At 10.9 percent, the operating margin did not reach the exceptionally high figure achieved in the prior-year period of 12.3 percent, but did again reach a level well above the industry average.

As a result of projects won during the reporting period, Linde was able to continue to strengthen its position as a leading gases and engineering company in the growth markets of Russia and Asia. In a joint venture with chemical company JSC KuibyshevAzot, Linde will build and operate a large ammonia plant on the Togliatti site in Russia. Investment in this project will total around EUR 275 m.

Back in the first quarter of 2013, Linde was awarded a major contract by Reliance Industries Ltd. (RIL) to build six air separation plants for the production of oxygen at the Jamnagar refinery and petrochemical site in India. Under the terms of the contract, which is worth around EUR 450 m, Linde will also supply two synthesis gas purification units. In the course of 2013, the scope of this project was further expanded to include, for example, Linde providing RIL with plants on the Jamnagar site for the recovery of sulphur and for the production of pure hydrogen. As a result, the total value of the order to Linde is now EUR 700 m.

The order backlog in the Engineering Division has remained at a very high level. At 30 September 2013, it stood at EUR 5.135 bn (31 December 2012: EUR 3.700 bn).

Engineering Division – Outlook

A relatively stable market environment is expected in the international large-scale plant construction business for the rest of the 2013 financial year. The order backlog remains at a very high level, creating a good basis for a solid business performance in the Engineering Division over the next two years. Linde continues to expect to generate the same level of revenue in its plant construction business in the 2013 financial year as in 2012. The Group anticipates that it will achieve an operating margin in the 2013 financial year of at least 10 percent.

Linde is well-positioned in the international market for olefin plants, natural gas plants, air separation plants and hydrogen and synthesis gas plants and will derive lasting benefit in particular from investment in two structural growth areas: energy and the environment.

To coincide with the publication of the interim report, a webcast for analysts will take place today at 2pm German time in English with Georg Denoke, CFO of Linde AG. Journalists will have the opportunity to watch the webcast by following this link:

The Linde Group is a world leading gases and engineering company with around 63,000 employees in more than 100 countries worldwide. In the 2012 financial year, Linde generated revenue of EUR 15.280 bn. The strategy of the Group is geared towards long-term profitable growth and focuses on the expansion of its international business with forward-looking products and services. Linde acts responsibly towards its shareholders, business partners, employees, society and the environment – in every one of its business areas, regions and locations across the globe. Linde is committed to technologies and products that unite the goals of customer value and sustainable development.

N. B.: Linde has applied the new accounting standards IFRS 10 and IFRS 11 from 1 January 2013. The consolidation method applied to joint ventures has changed as a result. Some joint ventures are now fully consolidated in the Group financial statements and some are included on the basis of the share of equity held by The Linde Group. As these standards have been applied with retrospective effect from the date of acquisition or formation of the joint ventures and this has an impact on virtually all the items in the statement of financial position and the statement of profit or loss, the prior-year figures have been adjusted accordingly in the Group interim report. For more detail about the impact of the first-time adoption of IFRS 10 and IFRS 11, please see Note 1 "General accounting policies" in the Notes to the Group interim financial statements on pages 22 to 28 of the Group interim report. 1 Operating profit: EBITDA including share of profit or loss from associates and joint ventures. 2 Return on capital employed adjusted for the amortisation of fair value adjustments identified in the course of the BOC purchase price allocation.

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